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Rules Governing Practice before IRS

Practice Units

As part of LB&I's knowledge management efforts, Practice Units are developed through internal collaboration and serve as both job aids and training materials on tax issues. For example, Practice Units provide IRS staff with explanations of general tax concepts as well as information about a specific type of transaction. Practice Units will continue to evolve as the compliance environment changes and new insights and experiences are contributed. Please visit this site periodically for new and updated Practice Units which are shared below.

To provide feedback on a specific Practice Unit, please send an email to LBI Practice Unit Public Feedback and specify the Practice Unit’s name and Document Control Number (DCN), which are both listed on the Practice Unit’s cover page. Please do not reference a specific individual or entity in your email as comments may be subject to future release. The IRS does not commit to respond to suggestions or comments.

Practice Units are available in Adobe PDF and must be viewed with the Acrobat Reader.

NOTE: Practice Units are not official pronouncements of law or directives and cannot be used, cited or relied upon as such.  Practice Units provide a general discussion of a concept, process or transaction and are a means for collaborating and sharing knowledge among IRS employees.  Practice Units may not contain a comprehensive discussion of all pertinent issues, law or the IRS's interpretation of current law. Practice Units do not limit an IRS examiner’s ability to use other approaches when examining issues. Practice Units and any non-precedential material (e.g., a private letter ruling, determination letter, or Chief Counsel advice) that may be referenced in a Practice Unit may not be used or cited as precedent. References to third party service providers and documents, like news or journal articles, are for informational purposes only and do not constitute an endorsement of any vendor, document, or the services or views offered by such third party.

2018
06-19-2018 Interest Capitalization for Self-Constructed Assets (PDF, 743KB)
05-14-2018 ASC 730 Research and Development - How It Relates to IRC 41 and 174 (PDF, 196KB)
05-14-2018 ASC 730 Directive - Computing Qualified Research Expenses (PDF, 297KB)
05-14-2018 Disposition of Nonfunctional Currency (PDF, 221KB)
04-30-2018 Losses Claimed in Excess of Basis (PDF, 457KB)
04-30-2018 Examining the Qualifying Advanced Energy Project Credit (PDF, 222KB)
04-17-2018 Exhaustion of Administrative Remedies (PDF, 174KB)
04-12-2018 General Deductions of a Foreign Corporation Engaged in U.S. Trade or Business (Non Treaty) (PDF, 151 KB)
04-12-2018 Reduced Foreign Taxes Under Treaty Provisions (PDF, 104 KB)
03-08-2018 Valid Shareholder Debt Owed by S Corporation (PDF, 130KB)
02-28-2018 Functional Currency of a QBU (PDF, 144KB)
02-08-2018 Definition of Foreign Personal Holding Company Income and the Common Exceptions (PDF, 160KB)
02-02-2018 Adjustments to Debt Basis (PDF, 564KB)
01-11-2018 Stock Basis Ordering Rules (PDF, 86KB)
01-10-2018 U.S. Territories - Self-Employment Tax (PDF, 90KB)
01-02-2018 Substantial Contribution Test for CFC Manufacturing Exception (PDF, 169K)
2017
12-14-2017 Initial Stock Basis (PDF, 108K)
12-13-2017 Calculation of the IRC 956 Inclusion (PDF, 316K)
12-7-2017 Employee Share of Employment Taxes - U.S. Citizens and Resident Aliens Working Abroad  (PDF, 105K)
12-7-2017 U.S. Persons Residing Abroad Claiming Additional Child Tax Credit  (PDF, 152KB)
11-21-2017 Common Ownership or Control Under IRC 482 - Inbound (PDF, 191KB)
11-21-2017 Common Ownership or Control Under IRC 482 - Outbound (PDF, 205KB)
11-20-2017 Adjustments to Stock Basis (PDF, 186KB)
11-06-2017 Advance Pricing Agreement for Tangible Goods Transactions –Inbound (PDF, 386KB)
11-06-2017 Advance Pricing Agreement for Tangible Goods Transactions –Outbound (PDF, 319KB)
10-19-2017 Overview of Withholding Under FIRPTA for Sales by Individuals (PDF, 151KB)
10-17-2017 Land Developers and Subcontractors – Proper Method of Accounting (PDF, 85KB)
10-17-2017 Overview of Entity Classification Regulations (a/k/a Check-the-Box) (PDF, 186KB)
10-17-2017 U.S. Real Property Holding Corporations - USRPHC Status (PDF, 136KB)
10-10-2017 Failure to File the Form 5471 – Category 2 and 3 Filers – Monetary Penalty (PDF, 259KB)
09-15-2017 Competent Authority Revenue Procedure 2015-40 Guidance: U.S.-Initiated Adjustment(s) (PDF, 325KB)
09-15-2017 High Value Services: Technical and Marketing Fees – Inbound (PDF, 261KB)
09-14-2017 Categorization of Income and Taxes Into Proper Basket (PDF, 179KB)
09-14-2017 Creditable Foreign Taxes (PDF, 117KB)
09-14-2017 Sourcing of Income (PDF, 253KB)
09-14-2017 Verifying Refund Requests of IRC 1441 Withholding on FDAP Income (PDF, 242KB)
06-16-2017 The Meaning of “Substantially Complete” with Reference to International Information Return Penalties (PDF, 144KB)
06-06-2017 Functional Currency Determination (PDF, 118KB)

04-24-2017

Physical Presence Test for Purposes of Qualifying for IRC 911 Tax Benefits

(PDF, 173KB)

04-21-2017

Overview – Expense Allocation/Apportionment in Calculation of the IRC 904 FTC Limitation

(PDF,  181KB)

04-11-2017

FTC General Principles

(PDF, 138KB)

03-01-2017

Summary of Foreign and Domestic Loss Impacts on the Foreign Tax Credit

(PDF, 185KB)

02-14-2017

Hedge Fund Basics

(PDF, 179KB)

02-14-2017

Monetary Penalties for Failure to Timely File a Complete and Accurate Form 8865 – Category 1 & 2 Filers

(PDF, 277KB)

01-31-2017

Basket Transactions

(PDF, 194KB)

01-30-2017

Exchange Gains/Losses on Payables and Receivables Denominated in a Nonfunctional Currency

(PDF, 164KB)

01-30-2017

Official versus Free Market Exchange Rate

(PDF, 107KB)

01-30-2017

Sourcing of Exchange Gains or Losses in Currency Transactions

(PDF, 120KB)

01-30-2017

How to Assess Penalties for Failure to File Form 8886 Disclosing IRC 988 losses

(PDF, 191KB)

01-30-2017

Using an IRC 6038A Summons when a U.S. Corporation is 25% Foreign Owned

(PDF, 437KB)

01-04-2017

IRC 367(d) Transactions in Conjunction with Cost Sharing Arrangements (CSA)

(PDF, 386KB)

2016

11-14-2016

Employee Share of Employment Taxes - U.S. Citizens and Resident Aliens Working Abroad

(PDF, 121KB)

11-14-2016

Self-Employment Taxes - U.S. Citizens and Resident Aliens Working Abroad

(PDF, 114KB)

11-08-2016

Portfolio Debt Exemption – Requirements and Exceptions

(PDF, 223KB)

10-14-2016

Source of Income for Nonresident Alien Individuals

(PDF, 162KB)

10-13-2016

Identifying Foreign Goodwill or Going Concern

(PDF, 544KB)

09-23-2016

Sourcing of Multi-Year Compensation Arrangements Including Stock Options for FTC Limitation

(PDF, 139KB)

09-23-2016

Comparison of the Arm’s Length Standard with Other Valuation Approaches – Outbound

(PDF, 117KB)

09-23-2016

Comparison of the Arm’s Length Standard with Other Valuation Approaches – Inbound

(PDF, 116KB)

8-23-2016

Taxation on the Disposition of USRPI by Foreign Persons

(PDF, 204KB)

08-19-2016

Calculating Foreign Earned Income Exclusion – Partner in a Partnership with Foreign Earned Income

(PDF, 311KB)

08-19-2016

Foreign Housing Deduction (IRC 911)

(PDF, 255KB)

07-20-2016

Overview of Qualified Business Units (QBUs)

(PDF, 460KB)

07-20-2016

Overview of IRC Section 988 Nonfunctional Currency Transactions

(PDF, 525KB)

07-20-2016

Character of Exchange Gain or Loss on Currency Transactions

(PDF, 175KB)

07-15-2016

FDAP Payments – Source of Income

(PDF, 115KB)

07-08-2016

Foreign Housing Exclusion (IRC § 911)

(PDF, 240KB)

07-05-2016

Corporate Inversions - Overview of Major Issues

(PDF, 292KB)

06-14-2016

Failure to File the Form 926 – Return by a U.S. Transferor of Property to a Foreign Corporation – Monetary Penalty

(PDF, 398KB)

06-02-2016

FDAP Withholding Under Chapter 3

(PDF, 260KB)

05-12-2016

Taxpayer’s Affirmative Use of IRC 482

(PDF, 214KB)

04-06-2016

Three Requirements of IRC 482

(PDF, 246KB)

03-18-2016

Inbound Resale Price Method Routine Distributor

(PDF, 264KB)

03-18-2016

Computing Foreign Base Company Income for US Individual Shareholders

(PDF, 185KB)

03-17-2016

Concepts of Foreign Personal Holding Company Income

(PDF, 157KB)

03-17-2016

Verifying Refund Request of IRC 1445 Withholding on Dispositions of U.S. Real Property Interests

(PDF, 265KB)

03-14-2016

Interest Expense Limitation Computation under §163(j)

(PDF, 354KB)

03-09-2016

Allocation and Apportionment of Deductions for Nonresident Alien Individuals

(PDF, 3,732KB)

03-09-2016

FDAP Income

(PDF, 322KB)

03-07-2016

Residual Profit Split Method - Outbound

(PDF, 395KB)

03-04-2016

Review of Transfer Pricing Documentation by *Outbound Taxpayers

(PDF, 529KB)

03-04-2016

Outbound Services by US Companies to CFCs

(PDF, 247KB)

02-19-2016

Outbound Transfer of Foreign Stock Followed by Check-The-Box Election

(PDF, 351KB)

02-19-2016

Residual Profit Split Method - Inbound

(PDF, 381KB)

02-19-2016

Revenue Procedure 99-32 Inbound Guidance

(PDF, 443KB)

02-19-2016

Interest Expense of a Foreign Corporation Engaged in a U.S. Trade/Business (Non-Bank, Non-Treaty)

(PDF, 291KB)

02-19-2016

Gross Effectively Connected Income (ECI) of a Foreign Corporation (Non-Treaty)

(PDF, 225KB)

02-19-2016

Interest Expense of US Branch of a Foreign Bank Non-Treaty

(PDF, 254KB)

02-19-2016

Calculating the Net Adjustment Penalty for a Substantial Valuation Misstatement

(PDF, 330KB)

02-12-2016

Non-Services FDAP Income

(PDF, 300KB)

02-09-2016

Receipt of Dividends or Interest from a Related CFC

(PDF, 244KB)

02-08-2016

Outbound Transfer of Domestic Stock

(PDF, 325KB)

02-08-2016

Pricing of Platform Contribution Transaction (PCT) in Cost Sharing Arrangements (CSA) Acquisition of Subsequent IP

(PDF, 334KB)

02-04-2016

Intercompany Interest  Rates Under the Situs Rule of IRC Section 482

(PDF, 235KB)

02-04-2016

Outbound Transfer of Foreign Stock

(PDF, 417KB)

02-04-2016

Change in Participation in a Cost Sharing Arrangement (CSA) – Controlled Transfer of Interest and Capability Variation

(PDF, 411KB)

01-21-2016

Concepts of Foreign Base Company Sales Income

(PDF, 418KB)

01-20-2016

Overview of Exchange of Information Programs

(PDF, 137KB)

01-20-2016

Types of EOI Exchanges

(PDF, 152KB)

01-20-2016

Field Procedures for Handling Foreign Initiated “Specific” Requests under EOI Agreements

(PDF, 189KB)

2015

12-01-2015

Basic Offshore Structures Used to Conceal U.S. Person’s Beneficial Ownership of Foreign Financial Accounts and Other Assets

(PDF, 372KB)

12-01-2015

Defining the Entity – Foreign Trusts

(PDF, 453KB)

12-01-2015

Foreign Grantor Trust Determination – Part II – Sections 671-678

(PDF, 675KB)

12-01-2015

Foreign Grantor Trust Determinations – Part I – Section 679

(PDF, 673KB)

11-23-2015

Failure to File the Form 3520/3520-A - Penalties

(PDF, 210KB)

11-23-2015

Failure to File the Form 8865 – Category 1 and 2 Filers – Monetary Penalty

(PDF, 308KB)

11-23-2015

Foreign Partnership – Taxation

(PDF, 289KB)

11-13-2015

Overview of Subpart F Income for U.S. Individual Shareholders

(PDF, 265KB)

11-12-2015

Failure to File the Form 5471 – Category 4 and 5 Filers – Monetary Penalty

(PDF, 335KB)

11-12-2015

Determination of U.S. Shareholder and CFC Status

(PDF, 245KB)

11-04-2015

License of Intangible Property from U.S. Parent to a Foreign Subsidiary

(PDF, 268KB)

11-04-2015

Deemed Annual Royalty Income Under IRC 367(d)

(PDF, 321KB)

10-29-2015

Definition of Appropriate Exchange Rate Overview

(PDF, 184KB)

10-29-2015

Sale by CFC to Unrelated Parties of Products Manufactured by Branch

(PDF, 225KB)

10-29-2015

Identification of a U.S. Trade or Business of a Nonresident Alien

(PDF, 199KB)

10-29-2015

Conducting Functional Analysis for Foreign Base Company Income (FBCI)

(PDF, 168KB)

10-29-2015

Concepts of Foreign Base Company Services Income

(PDF, 200KB)

10-29-2015

Branch Rules for Foreign Base Company Sales Income

(PDF, 222KB)

10-29-2015

Branch Sales to Unrelated Parties of Products Manufactured by CFC

(PDF, 216KB)

10-22-2015

Monetary Penalties for Failure to Timely File a Substantially Complete Form 5471 --Category 4 & 5 Filers

(PDF, 454KB)

10-22-2015

Using an Authorization of Agent when a US Corporation is 25% Foreign Owned

(PDF, 400KB)

10-22-2015

Using Alternative Means to Obtain Foreign Based Evidence

(PDF, 338KB)

10-01-2015

Treaty Exemption of Income from Teaching

(PDF, 348KB)

09-10-2015

Inbound Liquidation of a Foreign Corporation into a U.S. Corporate Shareholder

(PDF, 421KB)

09-09-2015

Accounting for Intangibles and Services Associated with the Sale of Tangible Property - Outbound

(PDF, 371KB)

08-28-2015

Foreign-To-Foreign Transactions – IRC 367(b) Overview

(PDF, 457KB)

08-28-2015

Overview of IRC 482

(PDF, 485KB)

08-21-2015

Short Term Loan Exclusion from United States Property

(PDF, 350KB)

08-21-2015

Bona Fide Residence Test for Purposes of Qualifying for IRC § 911 Tax Benefits

(PDF, 187KB)

08-21-2015

U.S. Persons Residing Abroad Claiming Additional Child Tax Credit

(PDF, 175KB)

08-21-2015

Calculating Foreign Earned Income Exclusion -Self-Employed Individual

(PDF, 188KB)

08-21-2015

Sourcing of Fringe Benefits for FTC Limitation

(PDF, 316KB)

08-21-2015

U.S. Territories – Determining Bona Fide Residency Status

(PDF, 275KB)

08-21-2015

Sourcing of Salary and Compensation

(PDF, 278KB)

08-21-2015

Calculating Foreign Earned Income Exclusion -Employee

(PDF, 174KB)

08-21-2015

Payee Documentation for Treaty Benefits

(PDF, 360KB)

08-21-2015

Effectively Connected Income (ECI)

(PDF, 183KB)

08-04-2015

Branch-Level Interest Tax Concepts

(PDF, 776KB)

07-17-2015

CFC Purchased From Related Party with Same Country Sales

(PDF, 250KB)

07-17-2015

CFC Sale to Related Party With Same Country Unrelated Party Manufacturing

(PDF, 246KB)

2014

12-15-2014

Interest Income Derived by CFC or QBU Engaged in Banking Financing or Similar Business

(PDF, 548KB)

12-15-2014

Computing Foreign Base Company Income

(PDF, 287KB)

12-15-2014

Subpart F Overview

(PDF, 279KB)

12-15-2014

Disposition of a Portion of an Integrated Hedge

(PDF, 430KB)

12-15-2014

Asset Valuation using the FMV Method for Interest Expense Allocation to Calculate FTC Limitation

(PDF, 350KB)

12-15-2014

Overview of Interest Expense Allocation and Apportionment in Calculation of the FTC Limitation

(PDF, 217KB)

12-15-2014

French Foreign Tax Credits

(PDF, 196KB)

12-15-2014

Exhaustion of Remedies

(PDF, 566KB)

12-15-2014

Exhaustion of Remedies and Transfer Pricing

(PDF, 611KB)

12-15-2014

Exhaustion of Remedies in Non Transfer Pricing Situations

(PDF, 632KB)

12-15-2014

How to Allocate and Apportion Research and Experimental Expenses

(PDF, 216KB)

12-15-2014

Issuing a Formal Document Request when a US Taxpayer is Unresponsive to an IDR

(PDF, 503KB)

12-15-2014

Section 861 Home Office and Stewardship Expenses

(PDF, 374KB)

12-15-2014

License of Foreign Owned Intangible Property by US Entity

(PDF, 334KB)

12-15-2014

Management Fees

(PDF, 331KB)

12-15-2014

Purchase of Tangible Goods from a Foreign Parent CUP Method

(PDF, 711KB)

12-15-2014

CPM Simple Distributor Inbound

(PDF, 354KB)

12-15-2014

Foreign Shareholder Activities and Duplicative Services

(PDF, 511KB)

12-15-2014

Best Method Determination for an Inbound Distributor

(PDF, 567KB)

12-15-2014

Services Cost Method Inbound Services

(PDF, 293KB)

12-15-2014

Arms Length Standard

(PDF, 600KB)

12-15-2014

Outbound Liquidation of US Corp to Foreign Parent IRC Section 367 e 2 Overview

(PDF, 1,038KB)

12-15-2014

Comparability Analysis for Tangible Goods Transactions Inbound

(PDF, 541KB)

12-15-2014

Review of Transfer Pricing Documentation by Inbound Taxpayers

(PDF, 454KB)

12-15-2014

Pricing of Platform Contribution Transaction in Cost Sharing Arrangements Initial Transaction

(PDF, 478KB)

12-15-2014

Cost Sharing Arrangements vs Licensing Alternative

(PDF, 442KB)

12-15-2014

Distinguishing Between Sale License and other Transfers of Intangibles to CFCs by US Transferors

(PDF, 509KB)

12-15-2014

Sale of Tangible Goods from a CFC to a USP CUP Method

(PDF, 360KB)

12-15-2014

CPM Simple Distributor Outbound

(PDF, 534KB)

12-15-2014

Revenue Procedure 99-32 Outbound Guidance

(PDF, 707KB)

12-15-2014

Outbound Transfers of Property to Foreign Corporation - IRC Section 367 Overview

(PDF, 788KB)

12-15-2014

Dual Consolidated Losses Overview

(PDF, 838KB)

12-15-2014

Comparability Analysis for Tangible Goods Transactions Outbound

(PDF, 435KB)

12-15-2014

Determining Tax Residency Status of Lawful Permanent Residents

(PDF, 450KB)

12-15-2014

Substantial Presence Test

(PDF, 498KB)

12-15-2014

Election under Section 6013g

(PDF, 348KB)

12-15-2014

Election under Section 6013h

(PDF, 434KB)

12-15-2014

First Year Election under 7701b4

(PDF, 471KB)

12-15-2014

IRC 911 Election and Revocation

(PDF, 100KB)

12-15-2014

Tax Home for Purposes of IRC Section 911

(PDF, 86KB)

12-15-2014

Branch Profits Tax Concepts

(PDF, 543KB)

12-15-2014

Qualification for Treaty Benefits under the Publicly Traded Test

(PDF, 608KB)

12-15-2014

Creation of a Permanent Establishment through the Activities of Seconded Employees in the United States

(PDF, 702KB)

12-15-2014

Overview of FDAP

(PDF, 306KB)